The Bloodsucking Truth about Purchasing Facility Assets
…and what you can do about it in your facility
A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty — Winston Churchill
Shaun the Facility Manager was having one of those days…
Shaun has muttered this quote under his breath thousands of times since day one. Yet still he feels an internal struggle about this career move being the right choice. As the new Director of Premises, he’s constantly faced clashes when making facility management decisions. Senior executives, experienced personnel, long tenured contractors, know-it-all consultants, take your pick. They’ve continually undermined his authority and decision making, and he’s only been hired for two months. He’s been a facility manager for 4 years (formerly a practicing civil engineer for 5 years) and was a recent hire at the Bethesda corporate headquarters of the ubiquitous business conglomerate — Megamonolith (MM) Inc.
Expectations for him were high — from the extensive, executive interview process, to the rigorous on-boarding with Human Resources — Shaun felt truly prepared for any challenge, and knew with his whole heart that he can positively influence the way properties were maintained under his watch. At least he thought so…
As the most senior technician, Brad “Dracula” Stoker fancied himself as the staunch defender of the “Megamonolith” way, and resident, 15 year elder statesman of the Premises department. He has no issue in throwing his weight around, and being the long tenured union representative doesn’t make it too tough to do so. Shaun considers himself fortunate to have been tipped off about Brad’s tantrums, but he didn’t see this one coming.
When the showdown on Main Street is in your office
Earlier today, Brad brazenly walked into Shaun’s open door policy office, and an old western movie stare-down ensues — with a bit of monologue thrown in for good measure. It seems that Brad didn’t particularly appreciate Shaun’s non-selection of Eugene Mechanical’s bid over Azteca Air Control, for the AC replacement at the Data Center. “They’re a strategic partner and friend of the organization”, he said. In his response, Shawn did his best to take the moral high road with his subordinate, as he prepared for the VP’s meeting later that morning. Comments like, “A sound recommendation was offered” and “The final, transparent decision, was with Procurement” were used.
Brad didn’t seem too impressed with Shaun’s response. He offered a toothy smile to Shaun’s face, and then he left his office.
The word about Brad is…
Brad Stoker fancies himself as a freelance contractor on weekends. Unknown to Shaun, Brad quietly vents about Shaun to one of his clients — the Vice President of Operations — Shaun’s boss, and host of the meeting Shaun was about to attend. Shaun’s friends will describe him as an emotionally cool customer on most days. That persona showed a momentary stress fracture or two when his boss openly questioned his financial decision making on the Data Center Air Condition selection. “How could you make such an expensive decision?”, he asked. Shaun’s squirms were noticed by the Director of Finance who was also in attendance. He filled the awkward pause needed by cheekily whispering…
“Oh. I see you’ve met Dracula.”
Overcoming Dracula’s Curse…
In mythology (and bad horror movies), Dracula was predominantly known for his superhuman strength, and supernatural powers — such as mind control and turning into strange creatures. Most understated and more importantly, Dracula also had a mind that was hundreds of years old. His decisions seemed effortless. He process complex issues in seconds, where mere mortals took noticeably longer. The collective of those experiences typically put him in an advantageous position over his adversaries. He was seemingly unstoppable to his foes.
How would you feel as a facility manager?
Many Facility Managers feel the same way:
Sometimes they’re forced to save pennies in the short term that can cost big dollars in the future.
They speak openly of feeling second guessed and undermined in their decisions
Sometimes staff feel they have jobs where they go in you do your job, and they don’t necessarily pay attention to what the company or department needs are. They just clock in and clock out.
It all seems hopeless when you think about it. But (there is always a but), the hero wins in old tales. Dracula was defeated.
… with Life Cycle Cost Analysis (LCCA)
Yes. You heard it here first. It was a well informed, disciplined approach to Life Cycle Cost Analysis that eventually became Dracula’s downfall. It’s the one thing that you can do to defeat your own “Draculas”. You see, he was a lot of things, but he couldn’t tell the future. As a facility professional, you will be well served to use this the discipline of Life Cycle Cost Analysis to your advantage. So, what is Life Cycle Analysis?
Life Cycle Cost Analysis is the systematic approach of looking at the complete life cycle of a product or process, from raw materials to final disposal of the asset or system. Simply put, it embraces a disciplined approach to evaluating the cost and impact of an asset throughout its life. From concept to disposal. Its easy for a facility professional to purchase an asset based upon its advertised features and benefits only. The easy way doesn’t always offer impact. Organizations are always monitoring their financial pulse, and institutional procurement policies are developed to specifically to support this.
Strongly Consider the Ongoing Costs
Ever heard the phrase “Pay me now, or pay me later?”. It’s always helpful to present more cost information to ensure that decision makers have the total picture. Exert the extra effort to do a bit of research and careful interviewing on each of the stages shown in the diagram above. Its a strategic way to demonstrate your commitment to the organization’s bottom line. Also, its always helpful to involve your stakeholders along the way.
So how does this affect our hero Shaun?
Game, set and….
“Shaun… Shaun… Don’t drift off when I’m speaking to you. So how is that purchase justifiable Shaun?”, the VP asked
Shawn took a deep breath before saying, “Yes, the initial capital outlay for Azteca’s AC unit was 10% greater at the point of sale, however, their submission presents more benefits to Megamonlith:
- Azteca offered a manufacturer’s supported warranty on all parts for three years, compared to one year offered by Eugene Mechanical. This means less cost liability to us.
- Azteca’s maintenance costs (parts & labor) were offered at a 15% Discount for the first year, and their parts inventory are certified by the manufacturer. Promising us more reliability for our equipment
- Eugene’s lower Energy Efficiency Ratio (EER) rating would have cost us a calculated 35% increase in the energy costs, compared to Azteca’s. We’re lowering our energy costs, in accordance with this year’s energy directive from the board.
- We’ve confirmed, in conjunction with Finance, that the return on investment of 37% on Azteca’s unit, compared to the alternative’s ROI of 11%. (The Finance Director then says with a smirk, “I do recall our conversation going something like that Shaun”)
- Finally, based upon consumer review of these products, the local alternative tends to be susceptible to frequent capacitor burnouts when running for more than 15 hours at a time. This requires frequent replacement of this part, unless they’ve been subjected to retrofitting from the UK manufacturer. The UK manufacturer will do so at no charge on the needed parts, however, their travel & lodging will need to be paid for, at our expense.
“Stop right there,” the VP then says. “Why didn’t you just tell us about the equipment recall to start of this conversation. You’ve wasted precious time in this meeting to discuss a simple air conditioner. We have more pressing matters to discuss.”
“Understood”, says Shawn, with a gentle smile on his face. However, as he took a deep breath he inwardly grumbled:
“Ain’t that the Bloodsucking Truth”
Good Life Cycle Cost Analysis is but one of the many tools in the skill set of a building management professional. That is as close to telling the future as anyone can get. My gut personal feeling is that there are many more experiences like this for Shawn and others like him to navigate. Three cheers for the small wins that facility professionals experience from time to time. Shawn’s experience, stands out as objections to decisions are best countered by a disciplined strategic analysis. Remember, not even Dracula can tell the future. But with your skills, you can come really close to doing just that.
This article, along with a few others, were originally posted on HERE on Smart Start Facility
Now its your turn, Facility Manager!
How can you consider the future in your decision making framework? Have you other any disciplined and unique ways to utilize life cycle costing, to dodge the “Draculas” within your organization?
Comment below and share how you plan on using life cycle analysis in your facility purchasing decisions. I look forward to hearing of your adventures.